Portfolio Update

RNS Number : 4410V

NB Global Floating Rate Income Fund

12 January 2012

 



NOT FOR RELEASE, DISTRIBUTION OR PUBLICATION, DIRECTLY OR INDIRECTLY, TO U.S. PERSONS OR INTO OR IN THE UNITED STATES, AUSTRALIA, CANADA OR JAPAN.

NB Global Floating Rate Income Fund

Portfolio Update

NB Global Floating Rate Income Fund Limited (the "Fund") is a Guernsey incorporated closed-ended investment company. This Fund targets an annualised net yield per share in the region of 5% on the issue price in the first full year of investment, plus capital appreciation, while seeking to protect investors from rising interest rates.

The Fund's managers expect to generate this yield by investing in a global portfolio of more than 100 senior secured corporate loans with selective use of senior bonds, diversified across at least 15 industry sectors. The Fund is managed by three accomplished portfolio managers backed by a credit team of over 30 investment professionals.

The Portfolio as at 31 December 2011:

u was split 88.1% USD, 6.7% EUR and 5.2% GBP

u was diversified across 31 industries with no industry representing over 16% of the portfolio

u has allocated 13% of the fund to bonds out of the maximum 20% allowable

u was invested primarily in Ba (39.0%) and B (52.1%) rated investments¹

Market Environment²

December ended on a positive note with the S&P/LSTA Leveraged Loan Index returning 0.51%, pushing the full-year return to 1.52%, the thirteenth annual gain in the Index's fourteen year history. From a quality perspective, BB and B rated issuers, where the Fund's investments are concentrated, outperformed the overall Index in 2011. In Europe, December was similarly positive with the S&P European Leveraged Loan Index (ELLI) returning 0.89%, taking the full year return to 0.72%. 

The loan market experienced significant volatility throughout the year (-4.4% in August; +2.9% in October) driven by a series of extraordinary macroeconomic events, particularly the European sovereign debt crisis. Despite the significant macro concerns, the fundamentals of the underlying companies in the US remained strong, as we expected. The default rate on the US S&P/LSTA Index was a mere 0.17% for 2011, just above the all-time low of 0.15%. The Fund has not experienced any defaults since inception. We continue to expect the US default rate to track well below historical levels as companies face very little in the way of near-term debt maturities and maintain extremely healthy liquidity positions. On the ELLI the default rate for the year was 4.1% and we expect this to rise to between 5 - 7% in 2012, given the potential for one or two larger defaults, as well as more acute operational/funding problems for some of the smaller, more regionalised issuers in the ELLI.

Investment Pipeline

As is typical at year-end, the US forward calendar fell and now sits at a two-year low of $5.1 billion, including $4.6 billion of M&A-related paper. We expect the forward calendar to ramp up as issuers continue to look to refinance debt and equity sponsors put their uninvested capital to work. The European pipeline through December was similarly light as arrangers continued to close syndication of partially sold deals from earlier in the year.

Given the prevailing macro uncertainties in Europe, our buying focus remains in the US and this is certainly reflective of the investments made during December. We continue to maintain a bias toward the primary issue market as these deals generally offer a 50 -100bps yield pick-up on comparable secondary market opportunities.

1. Moody's Investors Service.

2. Source: Standard & Poor's.

-ENDS-

For further information please contact:

Neuberger Berman Europe Limited          [phone]

Anji Stewart

FTI Consulting                                              [phone]

Neil Doyle                   

Ed Berry

Laura Pope

Background Information

The Company is a registered closed-ended investment company incorporated in Guernsey. The Company is managed by Neuberger Berman Europe Limited, which has delegated certain of its responsibilities and functions to the sub-investment manager, Neuberger Berman Fixed Income LLC, both of which are indirect wholly owned subsidiaries of Neuberger Berman Group LLC. The Company's investment objective is to provide its shareholders with regular dividends, at levels that are sustainable, whilst growing the capital value of its investment portfolio over the long term. To pursue its investment objective, the Company will invest mainly in floating rate senior secured loans issued in U.S. Dollars, Sterling, and Euros by North American and European Union corporations, partnerships and other business issuers.

Established in 1939, Neuberger Berman is one of the world's leading private, independent employee-controlled asset management firms, managing approximately $183 billion in assets as of September 30, 2011. Neuberger Berman provides a broad range of global investment solutions to institutions and individuals through customized separately managed accounts, funds and alternative investment products.  

This document is intended only for the person to whom it has been delivered.  No part of this document may be reproduced in any manner without the written permission of NB Global Floating Rate Income Fund Limited ("NBGFRIF").  The securities described in this document may not be eligible for sale in some states or countries and it may not be suitable for all types of investors. Prospective investors are advised to seek expert legal, financial, tax and other professional advice before making any investment decision.

The price of investments may fall as well as rise and investors may not get back the full amount invested. The target yield should not be taken as an indication of the Fund's expected future performance or results. The target yield is a target only and there is no guarantee that it can or will be achieved and it should not be seen as an indication of the Fund's actual or expected return.

This document is not intended to be an investment advertisement or sales instrument; it constitutes neither an offer nor an attempt to solicit offers for the securities described herein.  This document was prepared using the financial information available to NBGFRIF as at the date of this document.  This information is believed to be accurate but has not been audited by a third party.  This document describes past performance, which may not be indicative of future results. NBGFRIF does not accept any liability for actions taken on the basis of the information provided in this document.

Neuberger Berman is a registered trademark. © 2011 Neuberger Berman.

 

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